A Forrester Consulting

Thought Leadership Spotlight

Commissioned By Digital Realty

August 2014

How To StrategicallySource Your Next DataCentreData Centre Purchasing Drivers,Priorities, And Barriers For EuropeanOrganisations

Table Of Contents

Executive Summary ...........................................................................................1

Organisations Will Optimise And Consolidate Their Data Centres AndRely On Multiple Facilities.................................................................................2

Security Concerns And The Need For Control May Keep Many FacilitiesOn-Premises, But That Isn’t Necessarily The Best Solution........................3

Key Recommendations .....................................................................................5

Appendix A: Methodology ................................................................................6

Appendix B: Supplemental Material ................................................................ 6

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1

Executive Summary

Enterprises are experiencing rapid growth in the data theycan access and store, which is having a profound impact onhow they invest in data centres. Forrester estimates thatdata is growing at a rate of 25% to 50% each year, and inEurope, organisations are choosing to optimise andconsolidate their technology systems in an effort to supportnew business initiatives based on this information.1 Toaccomplish this, firms are looking for new facilities that cansupport greater volumes of data and high-speedconnections between data centres.

In January 2014, Digital Realty commissioned ForresterConsulting to survey European enterprises about thedrivers, priorities, and barriers behind their data centreinvestments. The study surveyed 266 IT decision-makers inthe UK, France, Germany, Ireland, and the Netherlands.

Forrester’s study yielded three key findings:

› Storage and business growth are key drivers foracquiring new data centre capacity. Fifty-six percent ofEuropean respondents cited storage growth as a topdriver for expanding their data centre capacity. In 2013,Forrester found a similar explosion of data growth,reporting that enterprises maintain an average of upwardof 3,200 terabytes (TB) of storage companywide — abouta 45% increase over the two years prior.2 This is a directresult of some of the next most popular drivers in the list

— business growth (48%) and big data (36%).Additionally, virtualisation was high on the list of drivers,as it requires significantly higher power densities and low-latency, high-capacity network infrastructure.

› Customers prioritise the data centre’s networkconnectivity options, resilience, cost of energy, andlevel of control when evaluating future capacity. InEurope overall, firms rated the network connectivityoptions, resiliency level and availability, cost of energy,level of control, and risk profiles as the most importantfactors when making decisions about acquiring new datacentre capacity.

› Ireland and the UK will lead data centre outsourcingin Europe. European firms regionwide increasingly wantto outsource or colocate their data centres. In Ireland,74% of respondents have plans to outsource their datacentres, compared with 39% in France, where customershave already made significant investments in buildingtheir own data centres (see Figure 1).

“Paper is going out very quickly.Everything is stored electronically.”— IT manager at an Irish manufacturing organisation

FIGURE 1In Europe, Most Organisations (53%) Plan To Outsource Their Data Centre In The Future

Base: 253 senior-level European decision-makers with responsibility for decisions involving data centresSource: A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February 2014

“How do you plan to source your new IT capacity in the future?”(Percentage of respondents who plan to outsource their data centre in the future

by colocating, fully outsourcing, or using infrastructure-as-a-serviceor managed services)

France(N = 59)

39%

Netherlands(N = 27)

41%

Germany(N = 72)

47%

UK(N = 76)

68%

Ireland(N = 19)

74%

2

Organisations Will Optimise AndConsolidate Their Data Centres AndRely On Multiple Facilities

Companies increasingly use digital platforms to win, serve,and retain customers. Customers, employees, businessunits, and partners already expect their IT environments tobe seamlessly available 24 hours a day, seven days aweek. More importantly, these stakeholders expectapplications to perform consistently within a securedcomputing environment, regardless of their geographicallocation when accessing the service. Our study found that:

› Demand continues to grow. Forty-five percent oforganisations expect their data centre spending to grow inthe next 12 months, and this trend will continue in 2015(see Figure 2). Companies expect their data centrespending to stabilise in 2016 to 2017 as they fullyoutsource their data centre services and use hybridenvironments to support demands associated withbusiness growth. Projected data centre spendingincreases are the highest in the UK (55% project anincrease), Ireland (56%), and Germany (51%), and muchlower in France (23%).

› Organisations are optimising and consolidating theirtechnology infrastructure to support new technologyinitiatives. Storage and business growth, virtualisation,big data, the Internet of Things (IoT), and the need forbetter business continuity and disaster recovery aredriving a strong growth in storage and computingenvironments. Fifty-six percent of respondents ratedstorage growth as the top reason for growth in data centrecapacity (see Figure 3). While specific results variedamong various countries, storage growth, businessgrowth, virtualisation, and big data were consistently ratedas the greatest drivers throughout Europe.

› European organisations will source their ITinfrastructure within hybrid environments. Companieswill use a mix of private and public cloud services to meetbusiness demands, including the need for IT infrastructurethat is always on and can be instantly provisioned, as wellas secure computing environments and consistentapplication performance. Seventy-four percent ofrespondents in Ireland and 68% of those in the UK wantto outsource their IT in some capacity, by colocating, fullyoutsourcing, or using infrastructure-as-a -service (IaaS) ormanaged services (see Figure 1).

FIGURE 2Data Centre Budgets Will Grow In The Next 12Months

Base: 266 senior-level European decision-makers with responsibility fordecisions involving data centresSource: A commissioned study conducted by Forrester Consulting onbehalf of Digital Realty, February 2014

“How do you expect your firm’s spending on datacentre facilities to change over

the next 12 months?”

Increase more than 10% 7%

Increase 5% to 10% 38%

Stay about the same 38%

Decrease 5% to 10% 13%

Decrease more than 10% 3%

FIGURE 3Organisations Will Optimise And ConsolidateTheir Technology Infrastructure To Support TheBusiness

Base: 266 senior-level European decision-makers with responsibility fordecisions involving data centresSource: A commissioned study conducted by Forrester Consulting onbehalf of Digital Realty, February 2014

“What do you believe are the greatest drivers for datacentre capacity growth today?”

Storage growth 56%

Business growth 48%

Virtualisation 42%

Big data 36%

Business continuity 26%

Consolidation 23%

Redundancy/resiliency 21%

Regulatory or compliance 18%

Application proliferation 17%

Mergers and acquisitions 14%

3

Security Concerns And The NeedFor Control May Keep ManyFacilities On-Premises, But ThatIsn’t Necessarily The Best Solution

“There is a proximity requirement tosupport it if you have to go there. Atthe same time, there is a distancerequirement for resilience.”— Data centre manager at a Belgian consumer products

manufacturer

European organisations are most concerned aboutnetwork connectivity options and resiliency whenselecting data centres. Eighty-one percent of respondentsrated the network connectivity options/carrier availability oftheir data centre facility as an “important” or “very important”evaluation criterion (see Figure 4). Risk profile (76%) andlevel of control (76%) are also high on the list, which is whyit is not surprising that 48% of companies plan to locate theirnext data centre within 100 miles of their headquarters (seeFigure 5). We found that:

› Technological advances have significantly improvedthe physical security of outsourced data centres.Global enterprises with regional headquarters have madeuse of remote infrastructure management capabilities thatallow them to handle most tasks from remote offices.These firms use vendors to support specific tasks such ason-site equipment replacement or ejecting and insertingtape for off-site archival.

› European organisations prioritise networkcapabilities to support future business growth.Networks must be transformed so they can support newfeatures, including digital platforms, bring-your-own-device (BYOD) policies, big data, and the Internet ofThings, and the associated growth in data and storageneeds. It is the right time for companies to provision low-latency, high-speed connections between their datacentres.

› Decision-makers are very aware of cost-relatedfactors. Cost of energy or power usage effectiveness(PUE) is important to 72% of European respondents,though other efficiency metrics (such as carbon footprint

and access to green energy sources) are near the bottomof the list of criteria. With growing awareness andregulation of carbon footprint reduction, and increasingpower tariffs, firms will need to look to partners that canmanage data centre infrastructure in the most optimalmanner.

FIGURE 4Data Centre Location And A Disaster-Resistant Facility Are Important SelectionCriteria In The Europe Region

Base: 266 senior-level European decision-makers withresponsibility for decisions involving data centresSource: A commissioned study conducted by Forrester Consultingon behalf of Digital Realty, February 2014

“How important are the following when makingdecisions about new data centre

facility investments?”

Network connectivity options/carrier availability/density 81%

Resiliency level andavailability 79%

Cost of energy at the datacentre location 77%

Level of control over datacentre facility 76%

Risk profile of the datacentre location 76%

Energy efficiency of thedata centre facility 72%

Access to cloud/managedservice providers 70%

Global footprint of datacentre provider 60%

Proximity of location tocorporate offices 58%

Ease of access tothe location 57%

Access to green andsustainable energy sources 56%

“4” (Important) or “5” (Very important)

4

FIGURE 5The Overwhelming Majority Of RespondentsPlan To Locate Their Next Facility Within TheirHome Region

Base: 266 senior-level European decision-makers with responsibility fordecisions involving data centresSource: A commissioned study conducted by Forrester Consulting onbehalf of Digital Realty, February 2014

“How do you expect your firm’s spending on datacentre facilities to change over

the next 12 months?”

500 or more miles (805 km or more) 5%

200 to 499 miles (321 to 804 km) 11%

100 to 199 miles (160 to 320 km) 19%

30 to 99 miles (50 to 159 km) 17%

Less than 30 miles (less than 50 km) 31%

Proximity to my HQ is not important 14%

Not applicable 2%

Don’t know 3%

5

Key Recommendations

Ninety-two percent of European organisations plan to expand their data centres within the next four years and arefaced with decisions about how to expand in a way that best supports their business needs. Your organisation muststrategically source its IT infrastructure in order to support business initiatives and provide seamless access tocomputing resources from anywhere in the world. Some applications will remain on-premises, such as those that needto perform consistently, have stringent data privacy requirements, or are interdependent on other applications, tools,and critical processes. However, companies will look to increasingly incorporate cloud solutions into the mix and willsource their data centres from vendors that can support high power densities, provide low latency with high-speedinterconnects, and have a low risk profile for disasters. When making decisions about data centre investments, youshould consider:

› How does my company want to pay for data centre facility space? Should you make a larger capitalinvestment with smaller operational expenses over time, or would you rather pay higher, ongoing operationalcosts with little to no upfront investment? As capital allocation priorities often favour one solution over another,you should prepare to defend your preferred solution, providing comprehensive details around costs, risks, andstrategic benefits.

› Is owning and operating a data centre a strategic differentiator for my company? As the quality, security,and regulatory compliance of outsourcing providers continue to improve, more organisations will consideroutsourced solutions and will need to evaluate the impact on employees, skill sets, and the overall organisation.Does your business want to continue to invest in data centre capabilities or would you rather redistribute staff intomore strategic roles?

› How effective is my organisation’s capacity planning? How confident are your capacity predictions for thenext five years? What about the next 15 years? Considering the constant uncertainty in the market, you shouldincorporate flexibility and scalability into your capacity planning so your organisation can accommodate change inthe future.

› What is my organisation’s risk tolerance and culture? Do the risks associated with large capital investmentsand uncertain future capacity requirements outweigh the need for direct oversight over your data centre? You willneed to determine how much financial and operational risk your organisation will tolerate and consider how youwould manage this risk using contracts and service-level agreements (SLAs).

Prioritise steps to optimise and consolidate your organisation’s IT infrastructure. Organisations will need to optimiseand consolidate their IT infrastructure if they want to move workloads efficiently and keep budgets balanced to supportnew business initiatives such as mobile, digital, big data, and the IoT. It’s important to remember that optimisation isnot just about cost. In today’s digital age, businesses compete around the clock on a global stage, making systemavailability, data sovereignty, and application performance more vital than ever before. Companies will need toembrace technologies such as virtualisation (which allows automation and better resilience) and high-performancenetwork topologies (which support high-compute densities and allow for shifting workloads).

6

Appendix A: Methodology

In this Digital Realty-commissioned study, Forrester conducted an online survey of 1,030 organisations in Australia, Canada,France, Germany, Hong Kong, Ireland, Japan, the Netherlands, Singapore, the US, and the UK to evaluate their data centreinvestment plans and drivers. Survey participants included senior-level decision-makers in IT, finance, and line-of-businessroles who were responsible for decisions regarding data centres. Respondents were offered a small incentive to thank themfor participating in the survey. The study began in January 2014 and was completed in February 2014.

Appendix B: Supplemental Material

RELATED FORRESTER RESEARCH

“Build Or Colocate? The ROI Of Your Next Data Center,” Forrester Research, Inc., August 20, 2013

“Strategic Benchmarks 2014: Data Center Strategy,” Forrester Research, Inc., May 29, 2014

Appendix C: Endnotes

1 Source: “Hardware Trends 2013: Data-Intensive Firms Lead Adoption Of Next-Generation Computing,” ForresterResearch, Inc., June 24, 2013.

2 Source: “Build Or Colocate? The ROI Of Your Next Data Center,” Forrester Research, Inc., August 20, 2013.